Grants Management Improvement Program Taskforce (GMIT) Report

Grants Management Improvement Program Taskforce (GMIT) Report NOVEMBER 2012

NSW State Government Initiatives : Health ___ 15
NSW State Government Initiatives : Other ___ 17
Commonwealth Government Initiatives : Health ___ 17
Commonwealth Government Initiatives : Other ___ 17
The Grants Management Improvement Taskforce ___ 22
Information and Discussion Papers ___ 23
Consultations ___ 23
Surveys ___ 24
Submissions ___ 25
Research ___ 26
Analysis of funding ___ 28

Analysis of funding ___ 28
Resourcing for management of NGO funding ___ 31
Sponsorship arrangements ___ 33
Data collection . . 33

The “What?” of funding ___ 36
The “Who?” of funding ___ 37
The “How?” of funding ___ 39
Stage One : Budget Allocation ___ 42
Stage Two : Determining Needs and Priorities ___ 42
Stage Three : Determining Programs ___ 43
Stage Four : Aligning Programs with “Peaks”/ State-wide Services ___ 44
Stage Five : Selecting the Funding Model / Awarding the Contract ___ 47
Stage Six : The Contract ___ 48
Whole of government approaches ___ 58
NSW Health approaches ___ 60
NGO Advisory Committee ___ 63
Timetable for implementation and transitional arrangements ___ 63

APPENDIX 1 ___ 70
APPENDIX 2 ___ 72
APPENDIX 3 ___ 75
APPENDIX 4 ___ 80
APPENDIX 5 ___ 86
APPENDIX 6 . . 88

EXECUTIVE SUMMARY The Program through which NSW Health provides funding to the non-government organisation (NGO) sector has been the subject of a number of reviews over recent years without resulting in any significant changes to the scope, nature or management of the Program. This Review, drawing upon those past efforts, has engaged in an extensive consultation process across all aspects of NSW Health and the NGO sector with a view to providing recommendations to the Ministry of Health about how this Program should be improved and revitalised.

What we are proposing is a new approach more in line with the current Government’s policy of devolving service delivery and decision making to a point as close to the patient/client as possible. In effect this means finding ways for the non-government organisation (NGO) sector to be more directly involved in the provision of some services which were previously delivered by the Ministry of Health or the Local Health Districts (LHDs) and Speciality Health Networks (SHNs). This presages a period of significant change in both thinking and service delivery. At the same time we have been guided in our thinking and recommendations by the need to respond to the current financial environment facing NSW Health and the imperative of adhering to the Minister’s commitment to patient-focused services based on the CORE principles of Collaboration, Openness, Respect and Empowerment. The Review proposes a new approach based upon:
  • Making fundamental decisions about which services currently provided by NSW Health should be considered for devolution to the NGO sector
  • Categorising all payments into a limited number of specific Programs, within each of which clear priorities for funding would be established
  • Determining whether funding and administrative responsibility for each service lies with the Ministry of Health or with the LHDs/SHNs
  • Providing criteria to determine which alternative models of funding should be adopted for any of these devolved service
  • Ensuring that in the decision making processes, quality external advice is provided by the Ministry’s NGO Unit and the NGO Advisory Committee
  • Partnering with funded peak or state-wide service organisations to support them in the provision of “backbone” services to the NGO sector
  • Executive Summary| GMIT Report 6
  • Moving all funding agreements from a variety of arrangements into contracts which should be fundamentally redrawn in a simplified and more coherent fashion designed to preserve adequate accountability on the one hand with an easing of the red tape/regulatory/reporting burdens on the other
  • Addressing a significant number of ancillary matters which we have identified and which need to be resolved in order to improve the overall efficiency and management of the Program.

Finally, but vitally, we make the point that leadership is required at all levels of NSW Health to drive forward the processes of reform and achieve the goals which are set out in our Review.

Chris Puplick AM Chair, Grants Management Improvement Taskforce ACKNOWLEDGEMENTS The Taskforce wishes to acknowledge the support which it has received from all sections of NSW Health, in particular the NGO Unit and all those people and organisations who so willingly consulted with the Taskforce in the conduct of this Review.

Executive Summary| GMIT Report 7 Recommendations RECOMMENDATION 1 That NSW Health make a formal statement about the value which it places on the health NGO sector in terms of its role in the delivery of improved health outcomes for the people of NSW, and its vital role in the delivery of health services in partnership with the government. RECOMMENDATION 2 That a clear statement be made about the framework within which the government and the NGO sector will work together to achieve the stated aims of the government and the Minister, in meeting the needs of the community and that the objectives of this partnership be outlined clearly.

RECOMMENDATION 3 That the Ministry of Health monitor closely recommendations arising from the ICAC report into NGO funding, support a position of minimum additional regulation being placed on the sector, and advocate that any such recommendations should support rather than hinder NGOs from further developing their services and partnerships with NSW Health. RECOMMENDATION 4 That the Ministry of Health adopt the general principles set out in the report of the Productivity Commission (as referenced) and use these as a basis for the restructuring of its health NGO Program.

RECOMMENDATION 5 That a centralised system of contract management be introduced at a Ministry level that does not detract from the ability of individual Program managers and staff within the Ministry from monitoring and evaluating funding outcomes and maintaining good relationships with the NGOs within their policy portfolio. RECOMMENDATION 6 That adequate resources/hours are allocated at an LHD level to manage local funding for NGOs. RECOMMENDATION 7 That a comprehensive review of Ministerial Policy Directives should be undertaken that relate to “other grants” and that assessments for continued funding of “other grants” should be aligned directly with the priority needs of NSW Health as they exist today.

RECOMMENDATION 8 That specific priority be given in the Ministry to revising the arrangements for effective centralisation of data collection (including financial data) in relation to the NGO Program and that this data be kept up-to-date and made readily accessible. RECOMMENDATION 9 That NSW Health defines and publishes a clear set of Program objectives for the NGO Program (in consultation with the NGO advisory committee) as a guide for implementation, management and evaluation of the Program as a whole. RECOMMENDATION 10 That the allocation of funding responsibility for services within the NGO Program be on the basis outlined.

RECOMMENDATION 11 That in terms of choice of funding models for support of NGO delivered services, maximum flexibility be retained and that any “one size fits all” model be rejected. RECOMMENDATION 12 That the Contract Management Model as set out as a six step process be

Executive Summary| GMIT Report 8 adopted by NSW Health. RECOMMENDATION 13 That contracts between NSW Health and the NGO sector reflect the recommendations (Contractual Provisions 1-14) as outlined. RECOMMENDATION 14 That the Program Areas model outlined be adopted by NSW Health. RECOMMENDATION 15 That Program Managers be appointed to head each NGO Program area.

RECOMMENDATION 16 That Program Managers or officers designated to manage contracts on behalf of NSW Health receive adequate formal training and support in contract management and that this be a responsibility of the relevant peak organisation in relation to contract managers within the individual NGOs. RECOMMENDATION 17 That NSW Health designate a peak/state-wide organisation(s) to be associated with each program area.

RECOMMENDATION 18 That NSW enter into specific contractual arrangements with designated peak/state-wide organisations to provide “backbone” support to members operating in their designated area and that this funding be direct from the Ministry. RECOMMENDATION 19 That NSW Health considers the option of contracting with a peak/state-wide organisation(s) for the management of a whole program area(s) which would be delivered by that peak organisation(s)’s constituent members. RECOMMENDATION 20 That transport be excluded from funding under the NGO Program, while ensuring that health-related transport services are adequately funded from some other appropriate source.

RECOMMENDATION 21 That all funding agreements between any part of NSW Health and the NGO sector be designated as contracts and that contracts be shaped as outlined above. RECOMMENDATION 22 That the development of an electronically-based contracts management system, along the lines recommended in the Matthews report, be given high priority by NSW Health. RECOMMENDATION 23 That a properly resourced NGO Unit is permanently established within the Ministry that has responsibility for the general oversight of the NGO Program, liaison with the Program Managers and which is able to advise LHDs/SHNs about matters relevant to the Program.

RECOMMENDATION 24 That there be a revision of the sign-off arrangements for contracts designed to reduce the requirement on the Minister to sign-off on contracts of less than $1 million and to make appropriate delegations of authority to facilitate red tape reduction in sign-off requirements. RECOMMENDATION 25 That NSW Health gives consideration to establishing a formal secondment arrangement between itself and the NGO sector/individual NGOs. RECOMMENDATION 26 That NSW Health raise with the Department of Premier and Cabinet the development of an initiative to standardise and coordinate aspects of NGO funding on a whole of government basis.

RECOMMENDATION 27 That in relation to the above, consideration be given to the “mutual

Executive Summary| GMIT Report 9 recognition” of NGO reporting requirements led by one agency only where NGOs are funded from multiple NSW Government sources. RECOMMENDATION 28 That NSW Health consider sponsoring an initiative with the Commonwealth for arrangements described above to be applied where funding of an NGO is derived from both State and Commonwealth sources. RECOMMENDATION 29 That NSW Health request information from other NSW Government Ministries/Departments/Agencies to ascertain the full extent of NSW Government funding of NGO delivered health services.

RECOMMENDATION 30 That arrangements be put in place whereby “accredited” NGOs can access the Treasury Managed Fund for insurance purposes.

RECOMMENDATION 31 That information be sought from the NSW Privacy Commissioner and the NSW Information Commissioner on the obligations to be placed on NGOs by state and Commonwealth legislation in relation to privacy protection, record keeping and the impact of the Government Information (Public Access) Act 2009 (GIPA) legislation to enable the transfer of personal health information across the health sector RECOMMENDATION 32 That NSW Health, through the NGO Advisory Committee, identify aspects of policy in relation to the use of social media and access to the internet which may minimise the opportunities for effective contracts to be developed between NSW Health and the NGO sector.

RECOMMENDATION 33 That the NGO sector not be excluded from access to capital works funding support. RECOMMENDATION 34 That NSW Health explores the opportunities for sponsoring NGO co-location where synergies can be achieved for enhanced client outcomes and with savings to NSW Health. RECOMMENDATION 35 That funding for research which is not an integral part of any funded Program not be provided from within the existing NGO Program. RECOMMENDATION 36 That staff displaced as a result of any change in service delivery arrangements be managed as part of the normal industrial relations process. RECOMMENDATION 37 That a clearinghouse be established (by competitive tender) to facilitate the exchange of information within and across the NGO sector related to successful services /initiatives.

RECOMMENDATION 38 That the special position of the medically supervised injecting centre be subject to further consideration in relation to its status and funding outside the NGO Program. RECOMMENDATION 39 That an NGO Advisory Committee be established along the lines proposed in this document above. RECOMMENDATION 40 That a timetable for the implementation of adopted review recommendations be established with provisions for any necessary transitional arrangements.

Executive Summary| GMIT Report 10 RECOMMENDATION 41 That early decisions be made on any new NGO funding arrangements and that these be transmitted to the sector as quickly as possible.

RECOMMENDATION 42 That once any new arrangements are put in place the sector be guaranteed that there will be no substantial or significant modifications made to it for a period of at least three years. RECOMMENDATION 43 That NSW Health commit itself to real leadership in promoting any new NGO funding arrangements.

Introduction| GMIT Report 11 The election of the Coalition Government in March 2011 brought about a number of fundamental changes in the structure and operation of the health system in New South Wales coming on top of the process of national health reform initiated by the Commonwealth over the past few years. Critically, under the direction of the newly appointed Minister (Hon Jillian Skinner MP) and the Director General (Dr Mary Foley) the system was reorganised with a Ministry of Health replacing the previous Department of Health and with major devolution of responsibility and authority away from the centre to reformed and restructured Local Health Districts (LHDs) and Speciality Health Networks (SHNs).

In addition the so-called “pillars” (Agency for Clinical Innovation, Bureau of Health information, Clinical Excellence Commission, Health Education and Training Institute) supporting the Ministry were given new roles and responsibilities and a new Pillar, NSW Kids and Families was established.

As part of the continuing review of the structure and function of all aspects of the health system a review was commissioned to examine the role which Non-Government Organisations (NGOs) or “third party providers” could play in improving health outcomes for the people of New South Wales. Specifically this Taskforce was commissioned to “consult with the NGO sector to find ways to practically improve the management and delivery of grants to NGOs.” This Report constitutes our response to that instruction.

The Government has set out its long-term goals for the State in NSW 2021 a strategic whole-ofgovernment plan aimed to “make NSW number one”.

In that Plan there are two goals which relate specifically to outcomes in health and for which the Minister for Health is responsible. These are: GOAL 11 – KEEP PEOPLE HEALTHY AND OUT OF HOSPITAL. GOAL 12 – PROVIDE WORLD CLASS CLINICAL SERVICES WITH TIMELY ACCESS AND EFFECTIVE INFRASTRUCTURE. In addition, Goal 4 (Increase the competitiveness of doing business in NSW) mandates action to “reduce red tape” by (inter alia) reducing the regulatory costs and burdens on the NSW community. The Minister for Health and Minister for Medical Research further committed the health system to ensuring that all its policies and activities were, in the first instance, patient-centred or patient focussed and established that the underlying principles of the system were to reflect the CORE values of Collaboration, Openness, Respect and Empowerment.

It is against these principles of devolution, patient-focussed and CORE principles and within the framework of the State Plan that this Review has been conducted. The Taskforce appointed to oversee this process is conscious of the fact that the NGO grants Program area of health-related activity has been the subject of several previous reviews or reexaminations. 1. Introduction

Introduction| GMIT Report 12 In November 1996 the NSW Treasury issued a document, State Government Funding of NonGovernment Organisations, A Guide to Funding Procedures which established a framework for the management of grants to NGOs. Although there have been many changes in the procedures since that date, the Principles set out in the NSW Treasury document are worth restating because they continue to apply and have relevance. They state: “The NSW Government and the community services sector are committed to the ongoing role of Non-Government Organisations in service delivery. The role of NGOs include:
  • Delivery of services which are part of the Government’s core responsibilities;
  • Facilitating citizen involvement in decision-making through the development of management and advocacy skills;
  • Improving the welfare of disadvantaged members of the community by allowing them to develop projects which are responsive to their perceived needs; and
  • Development of innovative forms of service delivery. For these reasons NGOs have an important place in the delivery of public services, and the government has developed these guidelines to give effect to a partnership which recognises the contributions of NGOs and the need for appropriate accountability mechanisms.” In 2006 the then Government issued a policy paper, Working Together for NSW as “an agreement between the NSW Government and NSW non-government human services organisations” which stated that the NSW government: “values the vital contribution that the non-government sector makes to build a fairer, more sustainable and inclusive society.” Working Together for NSW identified “Principles for the Relationship” as being based upon:
  • Evidence-based approach
  • Outcomes
  • Accountability
  • Respect
  • Communication
  • Independence
  • Inclusiveness. And “Principles for Funding Relationship” based upon:
  • Value for money
  • Fairness, integrity and transparency
  • Introduction| GMIT Report 13
  • Cooperation
  • Diversity
  • Consistency
  • Probity
  • Coordination. The current Taskforce and the NGO sector broadly endorses all those principles as being of continuing relevance and further notes and endorses the recognition by Working Together for NSW of the legitimate role of NGOs in advocating for changes in Government policies and priorities in a free and open democratic society. In 2009 the Department of Premier and Cabinet issued a paper, Non-Government Organisation Red Tape Reduction which promised that by July 2010 major changes would be made in such areas as standardisation of reporting and contract arrangements, the promotion of e-tendering, the use of plain English in contracts and the simplification of data collection. It does not appear that many of these commitments were subsequently given effect before the change of government in March 2011. Many of those recommendations are repeated in the report of the Productivity Commission (Contribution of the Non-for-Profit Sector, January 2010) and will find yet further reiteration here. In May 2012 a new Policy Directive was issued by NSW Health (Red Tape Reduction Initiative PD2012_023) which sets a red tape reduction target of $10m by June 2015. Such targets and the strategies to be used are binding on both the Ministry and the LHDs to observe and implement. Clearly red tape reduction is an important incentive for all parts of the health system to cooperate in refining, streamlining and simplifying arrangements such as those which apply to the support and activities of NGOs.

During 2009/10 the then Department of Health undertook a comprehensive review of the NGO Program issuing a Discussion Paper on 7 October 2009 and a Recommendations Report in July 2010. That review was led by the then Deputy Director-General Richard Matthews and made a series of detailed recommendations focused on the management of the Program. The NGO sector was extensively involved in this review and a considerable degree of buy-in was established to both its processes and its recommendations. Many of those recommendations remain current and valid and have been endorsed by this Review to form part of our Report in due course.

Key objectives of the Matthews Review were to reduce red tape and improve governance, transparency and efficiency in the NGO Program; make sure that the Program yielded value for money and was complementary with NSW Health priorities; and strengthen partnerships and service delivery between NSW Health and the NGO sector. Each of those objectives has also underpinned the work of this Review.

Where this Review differs is that whereas the Matthews Review was focused on making recommendations to streamline and improve the management of the existing Program, this Review is given a far wider scope to encompass the new approach of a new government focused upon both improved grants administration and “introduce(ing) opportunities for new partnerships between

Introduction| GMIT Report 14 NSW Health and non-government organisations and other community providers” where greater emphasis is being placed on the purchaser/provider models for the delivery of services.

We are thus called upon to recommend not only how any funding arrangements should be administered but also what areas should be examined with the express opportunity of allowing services currently delivered from within the health system to be delivered by, or in partnership, with the NGO sector.

An overriding consideration for this Review is that NSW Health, like all other Government Departments is required to operate within Budget and that the current State budgetary position is one in which expenditure restraint is necessary. It is a priority for the current Government that services are both effective and efficiently provided and the recommendations of this Report are consistent with this. The Taskforce believes that if NSW Health wishes to achieve an overall strategic approach to the management of support mechanisms for the health NGO sector it should state clearly what the Program objectives of such an approach are, articulated as a coherent framework for health NGOs.

In addition, a formal restatement by NSW Health of its recognition of the importance of the NGO sector and the vital role which it plays in achieving positive and improved health outcomes for the people of NSW should be made. It is timely to revisit the approach taken in the 1996 Treasury Guidelines in more contemporary terms.

Recommendations RECOMMENDATION 1 That NSW Health make a formal statement about the value which it places on the health NGO sector in terms of its role in the delivery of improved health outcomes for the people of NSW, and its vital role in the delivery of health services in partnership with the government. RECOMMENDATION 2 That a clear statement be made about the framework within which the government and the NGO sector will work together to achieve the stated aims of the government and the Minister, in meeting the needs of the community and that the objectives of this partnership be outlined clearly.

The external environment | GMIT Report 15 Any consideration of policy objectives for NSW Health and its relationship with the NGO sector must be based on a clear understanding that there are many pressures in the external environment which need to be taken into account. In the first instance it is necessary to repeat that maintaining budget discipline and adherence to budgetary constraints and targets is a primary consideration of the State Government. There are then a series of issues which are fundamentally related to activities within the health sector itself which impact upon the Government/NGO relationship.

NSW State Government Initiatives: Health NSW Health is working towards the development of a State Plan which will articulate broad goals and objectives for the health system as a whole and all activities supported by NSW Health will need to be consistent with this. It is anticipated that the Plan will be finalised in 2013 but in the meantime any set of Government/NGO relationships should be consistent with any sectoral plans which have already been developed and adopted. Many NGOs have, in the course of this Review, indicated how much easier it is for them to frame their own operations and expectations of government where a clear Plan exists and the Review is sympathetic to this desire for greater direction and certainty on the part of NGOs.

NSW Health is moving to a new model for the funding of health services called Activity Based Funding (ABF). In short, this is a system whereby activity or services are purchased by the Ministry within agreed targets, at what is called a “State Price”. The unit of measure is a National Weighted Activity Unit (NWAU). Details of exactly what the Ministry will purchase from LHDs/SHNs will be detailed in its forthcoming Purchasing Framework document.

ABF budgets for LHDs/SHNs are based on the lower of the State Price or LHD’s/SHN’s Projected Average Cost (PAC) for the agreed level of activity. This means that where an LHD’s/SHN’s PAC is less than the State Price, it is funded at its PAC. Where are LHD’s/SHN’s PAC is greater than the State Price, it is funded at the State Price, with a transition payment applied in 2012/13, which represents the difference between the State Price and PAC. ABF applies at this stage to Acute admitted, Emergency and Non-admitted services for those facilities that had 3,500 or more cost weighted separations in 2009/10 (the reference year with respect to activity and costs for the 2012/13 model), with an interim funding model applied in NSW for Sub and Non-Acute and Mental Health services.

ABF will be extended nationally to Mental Health and Sub-acute services from 2013/14. Services such as teaching, research, and population health, and those facilities not in scope of ABF (i.e. those with less than 3,500 cost weighted separations per year) will be block funded.

With regard to non-admitted ABF services, activity continues to currently be collected on an occasion of service basis and grouped to service events by the Ministry in reporting to the Commonwealth. A service event is described as an interaction between one or more healthcare 2. The external environment

The external environment | GMIT Report 16 provider(s) with one or more non-admitted patients, containing therapeutic/clinical content and resulting in a dated entry in a patient’s medical record. The non-admitted patient service event is intended to capture instances of healthcare provision from the perspective of the patient.

The interaction may be for assessment, examination, consultation, treatment and/or education. Therefore, regardless of the number of health care providers or locations involved in the single consultation, a non-admitted patient service event must be counted once only. Under the “other non-admitted” category, services may be in-scope for non-admitted ABF where they are directly related to/substitute for an inpatient or emergency department attendance or are expected to improve the health or better manage the symptoms of persons with physical or mental health conditions.

There are still many complexities and details to be sorted out as far as ABF and the Ministry’s Purchasing Framework are concerned and there are many instances in which the introduction of ABF will impact on the operations of the NGO sector, most of which will emerge only in practice. However, under the Purchasing Framework, there is a potential opportunity for NGOs to leverage their capacity to provide services at a lesser price than the LHDs in a competitive environment. This of course reinforces the value of having a clear determination of the real costs of services being provided by NGOs which may potentially substitute for ABF eligible services.

The Ministry of Health is currently conducting a review of Non-Emergency Patient Transport (as well as a review of ambulance services, including the Royal Flying Doctor Service). This review has taken note of these developments and meetings have been held with relevant parties. Recommendations in this area form a later part of this report.

Earlier this year the State Government commissioned a review on certain non-clinical support services being provided to NSW Health, carried out by Garry Sturgess AO. It is not known whether any of the recommendations, if accepted, would impact on the NGO sector but there is some possibility that identified services might become contestable in a way which would interest the sector. In October 2012, following passage of the relevant legislation, a new Mental Health Commission was established and a first Commissioner appointed. The role of the Commission in relation to support of and partnership with the NGO sector is under discussion, however, it is not likely that the relationship between the Commission and the NGO sector will be finalised in the immediate future.

In November 2008 Mr Peter Garling SC presented his report Special Commission of Inquiry into Acute Services in NSW Public Hospitals which made a number of recommendations regarding the provision and coordination of services to children young people, women and families. In August 2011 Minister Skinner appointed Hon Ron Phillips to lead an Expert Group to consider these recommendations. That group submitted its report in February 2012 and in July 2012 NSW Kids and Families came into existence as an independent statutory authority to give effect to the Garling/Phillips recommendations. NSW Kids and Families takes its place alongside the four existing Pillars as an integral part of the operations of NSW Health.

It is to be expected that it will have significant interactions with the NGO sector and will need to work closely with that sector in formulating policy advice to be presented to Government.

The external environment | GMIT Report 17 NSW State Government Initiatives: Other The Independent Commission Against Corruption (ICAC) is undertaking a review of Funding NGO Delivery of Human Services in NSW and in August 2012 issued a Consultation Paper. This paper recognises that there are “compelling reasons for increasing the shift from government delivery to NGO delivery of human services” but seeks to examine what it characterises as “the corruption risk in the funding arrangements” which may exist or may develop. A number of the major NGOs in NSW have already made submissions to the ICAC inquiry.

In general these submissions make two points, namely that there appears to be no evidence that there is any corruption within this sector or as part of the funding arrangements and that any heavy-handed regulatory approach by ICAC would be both contrary to government efforts/policies to reduce red tape and potentially most discouraging of the continuation or expansion of NGO activity in partnership with government. The Review endorses these concerns. It is understood that NSW Health is making a submission related to the ICAC initiative to the Department of Premier and Cabinet which is coordinating a whole-ofgovernment response to the Inquiry.

Commonwealth Government Initiatives: Health The federal government has established 61 Medicare Locals throughout Australia (20 in NSW) as part of its national health reform plan. These organisations (which largely replace previous Divisions of General Practice) are intended to coordinate the provision of locally-based general practitioner and primary care services. Many NGOs have already established close working relationships with the relevant Medicare Local(s) in their area(s), although this is not uniformly the case. As with the Mental Health Commission, relationships between the NGO sector and Medicare Locals are a work in progress and there is considerable variation across the State as to how such arrangements are developing or might develop in the future.

Commonwealth Government Initiatives: Other Furthermore there are a variety of non-health related externalities which may impact upon the future of the NGO sector. In January 2010 the Productivity Commission released its research report Contribution of the Notfor-Profit Sector which was the most comprehensive review of this sector undertaken. The Commission made a significant number of recommendations some of which (such as establishment of the Australian Charities and Not-for-Profits Commission) have already been implemented. The Productivity Commission report and recommendations have generally been embraced by the NGO sector with a high degree of enthusiasm and support and its work and recommendations were replied upon extensively by NGOs in meetings with the Taskforce as the basis upon which relationships with the NSW Government and Ministry should be built. The Taskforce does not intend to repeat in detail the work or findings of the Commission but rather seeks to bring to attention a limited number of key findings/recommendations of that report which it endorses:
  • The Taskforce notes the clear statement in the Report about the vital role which NGOs play in the delivery of health services and supports a policy approach on the part of NSW Health which starts by making such a clear recognition explicit in its policy framework (see Recommendation 1)
  • The external environment | GMIT Report 18
  • The Taskforce supports the comment in the Report that “Many NFPs add value to the community through how their activities are undertaken. The way in which NFPs are organised, engage people, make decisions and go about delivering services is often itself of value.” (p. xxix)
  • The Taskforce endorses the Report’s comments that: - “there is considerable scope for better measurement to improve understanding of the effectiveness of NFP activities in achieving their objectives” (p. xxvi) and “most importantly, governments need to provide clarity about the extent to which they are funding a service. This should inform the extent to which the government can impose contract requirements and appropriate risk management strategies” (p. xxix).
  • Crucially in relation to the central recommendations of this Review, the Taskforce supports the comments of the Commission that: - “Government agencies should be required to consider ad select the most appropriate model of engagement for service delivery based on: - The nature of the service, including ability to identify and control quality standards - The capabilities of the clients (or their representatives) to make an informed choice - The availability of service providers and scope for competition and choice - The risk associated with the service.” (p. xxxviii) The Productivity Commission outlined its approach to the way in which governments should decide how to deliver services to the community through the NGO/NFP sector and set out a number of key recommendations which this Taskforce endorses: Productivity Commission Report Recommendations On Removing Impediments to Better Value Government Funded Services GETTING THE MODEL RIGHT RECOMMENDATION 121 Australian governments should ensure that they choose the model of engagement with not-for-profits that best suits the characteristics and circumstances of the service being delivered. In choosing between alternative models of engagement, governments should consider the nature of the outcomes sought, the characteristics of clients, and the nature of the market. In particular:
  • there should be no presumption that purchase of service contracting will always be the most appropriate model
  • where governments are seeking the delivery of a clearly defined outcome and markets are genuinely contestable purchase of service contracting should remain the preferred approach
  • where truly competitive markets develop and clients face real choice in the services available to them, governments should consider moving to client-directed service delivery models. This transition should be conditional upon there being appropriate safeguards in place to protect and empower vulnerable clients (or their carers) in exercising choice and ensure an acceptable minimum level of service quality and provision.
The external environment | GMIT Report 19 RECOMMENDATION 122 Where a market-based approach is not feasible or appropriate, governments should use other models of engagement. This may involve governments entering into either extended life or short-term joint ventures. Extended life joint ventures should adopt an iterative process that will:
  • involve all parties in the design of the program
  • embed and fund an agreed evaluation process, informing program design and modification
  • regularly review and revise the service delivery approaches in light of findings from evaluation, changing demands or environmental conditions
  • provide long-term or rolling funding with capacity to adjust funding in light of the modifications. RECOMMENDATION 123 Australian governments should ensure that whatever model of engagement is used to underpin the delivery of services it is consistent with the overarching principle of obtaining the best value for money for the community. In determining value for money, governments should explicitly recognise any indirect or wider benefits that providers may be able to generate. An evidence based approach should be used to assess the nature, extent and relevance of these types of benefits on a case-by-case basis.

RECOMMENDATION 124 Australian governments should assess the relative merits of the lead agency model on a case-by-case basis. This should include an assessment of the costs to not-for-profits of adopting this approach including any duplication of reporting and accountability requirements, the additional transaction costs associated with sub-contracting, and the potential for loss of diversity among providers. IMPROVING PROCUREMENT AND MANAGEMENT PROCESSES RECOMMENDATION 125 The length of service agreements and contracts should reflect the length of the period required to achieve agreed outcomes rather than having arbitrary or standard contract periods.

Extended life service agreements or contracts should set out clearly established:
  • processes for periodically reviewing progress towards achieving a program’s objectives
  • conditions under which a service may be opened up to new service providers or a provider’s involvement is scaled back or terminated. RECOMMENDATION 126 When entering into service agreements and contracts for the delivery of services, government agencies should develop an explicit risk management framework in consultation with providers and through the use of appropriately trained staff. This should include:
  • allocating risk to the party best able to bear the risk
  • establishing agreed protocols for managing risk over the life of the contract. RECOMMENDATION 127 Australian governments should urgently review and streamline their tendering, contracting, reporting and acquittal requirements in the provision of services to reduce compliance costs. This should seek to ensure that the compliance burden associated with these requirements is proportionate to the funding provided and risk involved.
The external environment | GMIT Report 20 Further, to reduce the current need to verify the provider’s corporate or financial health on multiple occasions, even within the same agency, reviews should include consideration of:
  • development of Master Agreements that are fit-for-purpose, at least at a whole-of-agency level
  • use of pre-qualifying panels of service providers. The Taskforce however notes that in relation to the Productivity Commission’s outline of arrangements supporting the operations of “competitive markets” it is important that standards and accountability mechanisms are designed which are appropriate and not overly burdensome for the operations of LHDs and which recognise their particular role within the public health sector. It may also be the case that in relation to specialist services (such as those related to Aboriginal health) the idea of competitive markets may have less attraction or sustainability.

The Commonwealth has established an Australian Charities and Not-for-Profits Commission (ACNC). This is expected to be operational early in 2013 and will take over from the Australian Treasury some aspects of the regulation of registered charities and at some later date (from 2014) other types of not-for-profit organisations. Almost all NGOs will fall into one of these two categories and hence may find themselves subject to regulation by the Commission. This is of particular importance to NGOs which are registered for tax-deductibility of donations. It is not known, at this stage, how the operations of the ACNC may impact upon those NGOs who are in partnership with the NSW government.

The Federal Coalition Opposition has committed to repeal of the legislation establishing the ACNC in the event of its election to office.

The 2011/2012 Federal Budget provided $549.8 million over five years (2011/12 to 2015/16) for the Partners in Recovery (PIR): Coordinated Support and Flexible Funding for People with Severe and Persistent Mental Illness and Complex Needs initiative. PIR aims to select “suitably placed and experienced non-government organisations” within Medicare Local geographic regions to become the “mechanism that ‘glues’ together all the supports and services” needed by eligible individuals. Organisations are currently being invited to apply for PIR status. NGOs which achieve this status may find themselves in a very different relationship with their State Government funders in the future.

The Commonwealth Government is developing and rolling out a National Disability Insurance Scheme (NDIS) which is to be trialled in several locations, including the Hunter Region of NSW (where up to 10,000 people are likely to be enrolled). As with most of the other instances mentioned above, the impact of the NDIS on the financing and operations of NGOs who might be involved in the provision of a range of disability-related services is unclear and will only emerge over a period of time.

In November 2012 the Federal Treasury’s Not-for-Profit Sector Tax Concession Working Group released a Discussion Paper Fairer, simpler and more effective tax concessions for the not-for-profit sector in which it seeks to canvass changes which could be made in this area. This is a further initiative derived from the recommendations of the Productivity Commission and is due to submit a final report in March 2013. It is unclear at this stage what impact this might have on future arrangements between the NSW Government and the NGO sector.

The external environment | GMIT Report 21 The introduction of the Fair Work Amendment (Transfer of Business) Bill 2012 into the federal parliament may impact upon the way in which staff entitlements are recognised and protected when services pass from the public sector to other delivery organisations.

This matter is discussed in greater detail in Chapter 7. The above issues demonstrate that the environment in which NGOs are operating or likely to operate in the future is far from straightforward. Major changes may result from policy decisions or administrative policies which are made entirely outside the purview of the Ministry of Health while there are also important decisions to be made by the Ministry and the State Government which may have equal impact.

Hence, a flexible approach to the readjustment of the relationship between the government and the NGO sector must remain on the agenda. Recommendations RECOMMENDATION 3 That the Ministry of Health monitor closely recommendations arising from the ICAC report into NGO funding, support a position of minimum additional regulation being placed on the sector, and advocate that any such recommendations should support rather than hinder NGOs from further developing their services and partnerships with NSW Health. RECOMMENDATION 4 That the Ministry of Health adopt the general principles set out in the report of the Productivity Commission (as referenced) and use these as a basis for the restructuring of its health NGO Program.

The consultation & research process | GMIT Report 22 The Grants Management Improvement Taskforce The Grants Management Improvement Taskforce (the Taskforce) was established by the Ministry of Health in August 2012 to make recommendations for the Grants Management Improvement Program (GMIP). The Taskforce was chaired by Chris Puplick AM, with members Sandra Bailey, Chief Executive Officer, Aboriginal Health and Medical Research Council; Ann Brassil, Chief Executive Officer, Family Planning NSW; Alison Peters, Director, Council of Social Service of NSW; and Larry Pierce, Chief Executive Officer, Network of Alcohol and other Drugs Agencies.

NSW Health representatives were Dr Rohan Hammett, Deputy Director-General, Strategy and Resources; Catherine Katz, Director, Inter-Government Funding Strategies and Integrated Care and Joanne Young, A/Associate Director, NGO Unit. The Taskforce secretariat was provided by the NGO Unit. Information on the Taskforce can be found at APPENDIX 1 , and by following this link: The Taskforce’s Terms of Reference were to make recommendations for the implementation of the GMIP and to examine and propose opportunities for new partnership arrangements between the NSW public health services sector and non-government organisations (NGOs) and community-based organisations.

The Taskforce’s Terms of Reference also required the Taskforce to convene a number of meetings with selected peak bodies and major NGOs (those in receipt of grants over $1 million per annum) to ensure the Taskforce gained a deeper understanding of the issues and to identify opportunities for creating new partnerships between the public sector and NGOs for health service delivery. The Taskforce also consulted with directors of branches in the Ministry of Health, which administer grants to NGOs, to seek their input on improving administration and management of grants and funding to NGOs. The Taskforce’s Terms of Reference can be found at APPENDIX 2, and by following this link: The Taskforce’s operation was guided by the Minister for Health’s CORE values of Collaboration, Openness, Respect, and Empowerment.

Key responsibilities of the Taskforce were to involve the NSW Health-funded NGO sector in a range of consultations and forums and to deliver the Taskforce’s Report to the Director-General, NSW Health by November 2012. Taskforce meetings were held on 22 August 2012, 28 September 2012, 16 October 2012 and 5 November 2012.

3. The consultation & research process

The consultation & research process | GMIT Report 23 Information and Discussion Papers The Taskforce provided information for stakeholders primarily through the NSW Health website. The Taskforce produced a discussion paper which was released on the NSW Health website in September 2012. The discussion paper was the focus of extensive stakeholder consultation and can be found at APPENDIX 3, and by following this link: pdf The discussion paper was circulated through NGO Coordinators and Program Managers, through some NGO peaks, at the Taskforce Community forums and through the NSW Health website.

Consultations Community forums The Taskforce consulted with NSW Health stakeholders at three forums. The forums were widely advertised in national and local media, through peak and state-wide organisations and through NSW Health NGO Coordinators and Program Managers.

  • Forum location Date # Participants Key issues raised DUBBO 17/9/2012 29
  • Need for consistency of contract arrangements in MoH and LHDs
  • Better geographical coverage of health services
  • Determination of the true cost of services provided by NGOs COFFS HARBOUR 18/8/2012 31
  • Need for support for NGO capacity building. Some NGOs described as ‘policy orphans’ as they are not linked to a major health program/ policy platform
  • The relationship between LHDs and NGOs was one of partnership and not patronage BLACKTOWN 20/9/2012 156
  • Need for definitions of what are clinical and what are shared services
  • Concern that increased NGO efficiency may be seen as a threat by some LHDs
  • Suggestions that NGOs could more effectively provide services
  • Many NGOs need NSW Health to continue to provide support to maximise service efficacy A list of participant organisations at each forum can be found at APPENDIX 4.
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